Cuban economics in my opinion should be labelled ‘cubanomics’. It’s a perfect square. Products purchased by the State from private corporations are eventually returned to private corporations and are resold to the State once more.
Cuban economic policies of the last decade have exacerbated social and economic divides. Amplifying the difference between those that have more in Cuban society and those that have less.
Cuban economic policy has institutionalised the very thing that the Cuban Revolution sought to undo. Government policy has created an entitled propertied class and a underclass of those with nothing but their labour to sell.
How Does Cuba Procure Goods From Abroad?
The Cuban State maintains tight control of all imports. Yet they’re not the most reliable source of goods on the island. Nor are they the most competitively priced.
The Cuban Government sells the goods it procures and imports to Cuba via MLC or ‘dollar stores’. So named because the goods sold in these MLC stores are denominated in MLC dollars.
Most MLC stores are routinely subject to shortages. As an example from December 2022 to February 2023 there was an island wide shortage of washing powder. But the island was awash with cans of Dutch ‘Windmill’ beer.
Poor planning and logistics plague Cuba’s economy and health care system daily. At the end of 2022 some intelligent chap, likely raised on state television channels where Fidel and his functionaries told all Cuban’s they’re smarter, more educated and generally better than every other country made the decision to import an endless supply of Windmill lager.
It likely never entered this bureaucrat’s train of thought that the people of Cuba may need to do laundry. Because how could this bureaucrat be wrong in his decision to import an endless supply of the worlds worst beer? He’s a Cuban genius because Cuban State television told him so.
Black Market Goods, Revolico And Cuban Smurfs
The flip side to the Cuban Government’s irregular and oft whimsical imports of random goods is the private sector and Cuba’s fully functional blackmarket, Revolico. It’s on Revolico where I procured my washing powder so that I could do laundry during my last stay on the island.
Everyday hundreds if not thousands of Smurfs enter Cuba with their luggage overflowing with goods to be sold on the black market. And they leave Cuba with the cash to pay for those goods.
The goods brought into Cuba in airline luggage are sold on Revolico and via private markets.
Yet the same goods found in the MLC ‘dollar stores’ are also sold on Revolico and via private markets. But they’re sold in the private markets denominated in the local CUP which is also called Moneda Nacional (MN).
This allows buyers the opportunity to pay in local currency without needing to access black market money changers in order to convert their CUP to USD or MLC. But more on that later in this article.
The Case Of The Underground Apple Store In Havana
I bet if I told you there is an underground Apple store in Havana modelled on a real Apple store replete with life-size posters of Steve Jobs, you wouldn’t believe me.
But there is an Apple store in Havana. And its from that store that I purchased this Apple MacBook Pro with M2 processor and upgraded hard drive and RAM that I’m currently typing this article on. It’s also where I procured many of the accessories necessary for our Youtube Channel.
The Havana Apple store has set itself up to fill a void in the Cuban economy overlooked by the Cuban Government. That genius bureaucrat who flooded Cuba with the worlds worst beer has likely never thought that maybe Cuban’s need computers if they’re to progress as a modern society.
Thus the Apple store in Havana stocks all of the goods and services found in any other Apple Store with which you’re accustomed. All the products currently found on the Apple store online are smurfed into Cuba daily in the luggage of average Cubans and their relatives.
There’s even some Chileans and Argentinian’s participating in the black market import of in demand items. And for some of these foreigners it’s their sole business.
These foreigners live from the income they earn carrying goods into Cuba that are sold to Cuban distributors. Distributors whom then on sell the goods in Cuba via Revolico and via private markets like the Havana Apple store.
State Owned Goods Entering The Black Market
I just spent most of my last few months in Cuba watching one Government run establishment. It just happened to be right across the road from my favourite bar. And being the gin soaked degenerate that I am I was always at the bar with a G&T in hand, looking out across the street.
I watched as products purchased by the State from private corporation were transferred to a Government run establishment. The Government trucks would turn up just before lunch time and restock this Government restaurant that also serves as a makeshift store.
I then watched as no more than an hour after each Government delivery a fleet of vehicles with license plates denoting private corporations would roll up and park by the side door. And be greeted by the Government staff.
The driver leading the convoy of business plated vehicles would hand the Government staff member a brick of cash. And the goods would be slyly loaded out the side door into the private corporation’s waiting vehicles.
The staff of this particular State run restaurant and makeshift store would pocket the cash. They’d then continue operating with limited products and produce. Selling the left overs that the corporates didn’t want to buy to the local Cubans at inflated prices.
Companies Selling Government Goods Back To The Government
Now, the process of the corporations buying Government merchandise under the table for cash isn’t the end of the storey. Because I would see those same goods resurface.
I’d frequently encounter the goods purchased by private corporations under the table for bribes resurfacing in private markets. Markets frequented by individuals driving vehicles with Government and diplomatic license plates.
You see, Cuban Government functionaries and foreign diplomats don’t like frequenting stores with long lines, shortages and haphazard product selections. Instead they shop at private markets and buy from private wholesalers.
But what they’re often buying when shopping for food and other consumable items are products originally imported into Cuba by the Government. With money derived by way of taxes paid by ordinary Cuban business owners and income generated by state owned industries.
They’re buying products that were originally bought at one price by the Government with money belonging to all Cubans. Products sold by individual Cubans at lower prices for bribes to private corporations who then raise the prices in CUP above the original Government prices, pocketing a nice profit along the way.
Private Cuban Wholesalers Selling To The Government
Now, from what I gather talking to people who run businesses in Cuba is that it’s not uncommon for the Cuban Government to buy from private wholesalers in Cuba.
And I’ve also heard that a lot of the products they do buy from these domestic wholesalers actually originated as Government imports. Thereby completing the Cuban economic cycle and producing a perfect square.
The square of Cuban economics goes like this; the Cuban Government purchases goods from a private corporation, transfers the goods to a Government store which on sells them to a private corporation.
Those goods bought for cents on the dollar (bribes) by private companies are then sold back to the Government at inflated prices. Leaving the Government and Cuban people at a loss and the private corporations laughing all the way to the bank.
All I can say is welcome to Cuba, the land of rampant corruption and haphazard policy making. A land where everyone but the average Cuban profits along the way.
How The Government Removes Foreign Currency
If you’re like me you’ll notice a disparity between what people are paid for their labor in the local CUP, also called Moneda Nacional (MN), and what they need to pay for goods in Government run stores that are priced in Moneda Libremente Convertible (MLC).
You’ll also likely notice that the Government never wants to be paid in the local currency. The Government only ever wants to be paid in foreign currency. And this is because Cuba’s Monopoly money is essentially worthless.
The Cuban economy and Cuban economics in general function to keep the poor and in their place and the Government above the people. The Revolution did away with racism but it institutionalised something far worse.
Che’s December 11, 1964, speech at the 19th General Assembly of the United Nations in New York was spot on. The Revolution removed racism. But in the years since the Revolution communism has given Cuba something much more sinister.
The Revolution has ingrained classicism into Cuban society. It’s created a distinct divide between those that have and those that have not. The Revolution has birthed an insurmountable divide that no ‘average’ Cuban can escape.
Moneda Libremente Convertible (MLC) And The Have Nots
Institutionalising classicism wasn’t the intention of the Revolution. And in point of fact the Revolution was diametrically opposed to classicism and recruited on the premises of class warfare. It recruited on the basis of righting the wrongs of the past and ensuring a fairer system for all.
Yet the institutionalisation of classicism in Cuban society is the end result of poor policy making and yet poorer governance.
Cuba’s gradual opening to the world and its relaxing of restrictions have made some Cubans wealthier than they once were. Yet it’s also made a much greater number of Cubans much poorer than they once were.
Those that had before Cuba’s policy changes now have more. And those that had nothing to begin with have even less. For Cuba’s elderly including those that may have been active combatants in the Revolution, eating from dumpsters is their new reality.
In a country awash with foreign currency for the first time in its history, the Government’s use of MLC and dollar stores seeks to vacuum up as much of those foreign dollars and euros as possible.
The Government’s attempt to keep itself a central player in the day to day to and fro of Cuban economics hurts those most vulnerable in Cuban society. Those that don’t have dollars or avenues for acquiring dollars are left with their needs unfulfilled.
And I would argue they’re left without their dignity and without their basic human rights.
MLC And The Rise Of Rampant Social Inequality In Cuba
The use of MLC hurts those who don’t have casa particulars to rent to extanjeros (foreigners) in USD. It hurts those who don’t own vehicles that can be used as La Nave’s or for taking extranjeros on tours.
And for the elderly that have nothing but their pensions after a life time of work or those that have nothing but their labour to sell in CUP, the Cuban Governments policies are crippling.
Those that have nothing cannot afford to enter a ‘dollar store’ because they have no dollars at all. They’re left with food stamp chicken and rice. But not even enough to last them the month.
Toilet paper, shampoo, conditioner and new clothing are all luxury items. Even once necessary medication with Cuba’s broken health care system and rampant corruption have now become luxury items.
All the while the ‘rich’ of Cuba, those that have cars and houses to rent, enjoy foreign travel and can buy whatever they want. They can be waited on hand and foot by those at home in Cuba who have less than them.
For roughly the cost of 2 bottles of shampoo a ‘rich’ Cuban can have a house keeper clean raw sewage from a blocked and overflowing toilet. They can have a trained electricians rewire parts of their houses for less than the cost of 5 cans of the worlds worst beer.
Time For A New Revolution Lead By The Cuban Military
For all the negative criticism the Cuban military receives internationally, I view the Cuban military as the one organ of State that has the potential to lead Cuba through a growing crises.
It’s not without precedent that the Cuban military has stood up and pushed back against the Government in Cuba. Cuba has a history of coup d’état.
If the politicians and policy makers cannot find a way to ensure that the basic needs of everyday Cubans are met, my money is on the Cuban military being the one State apparatus that has the training, chain of command and logistics to get the job done.
It’s not that the Cuban military don’t know what the Cuban people need. They have a ready made list in the form of the Universal Declaration Of Human Rights (1948). And the military’s primary role in society is as guardian of its people (the foundation of the State).
The military know what’s needed in Cuban society and they have the capability necessary to procure and provide what’s lacking. And it’s my firm belief that while watching the Government slowly drain life from the average Cuban, the will to act would be growing amongst the military rank and file.
Most of the members of Cuba’s military when they remove their uniforms at night are themselves average Cubans. Most of them don’t own casa particulars, motor vehicles or have incomes beyond their basic military wage. They are the average Cuban exemplified.
The Locus Of Action And Future Social Change In Cuba
For the younger generation and the older generation there are different factors at play that prevent action. The older generation are too focused on lining up for items each day or looking for ways to make ends meet.
While the younger generation is hooked on Instagram, the opium of the young Cuban masses and their one true religion. Younger Cubans are consumed by endless scrolling and ‘liking’ of each others images. And they’ll never look up from their screens.
If they ever did stop scrolling Instagram and look up they’d realise those Instagram images come at a price. A price neither they nor their friends could ever pay and which portray a lifestyle that in reality they will never be able to afford.
Now in between the young and the old of Cuba there is a class of people aged in their mid thirties to late forties. And these people are the potential locus of action and change in Cuba.
Cuba might be a safe country and it may lack firearms among the general population, but there is a military class in their thirties and forties who have a history in Cuba of coup d’état.
Will History Repeat And Will The Sergeants’ Revolt?
Those in their thirties and forties in the military would already see the fading enthusiasm of the younger generation for high minded Revolutionary ideals. And they would be unable to avoid noticing the daily trials and tribulations of their older friends and relatives.
This is because they are of an age where they’re beginning to realise that they will be unfit for service some-day. And the unstoppable decline of the CUP means their earnings, savings and pensions are worthless. After their service in the military their retirement pensions and benefits will have them too, eating from rich peoples dumpsters.
The Cuban health care system is broken and their military wages are worthless. They’ll be unable to afford to live let alone retire with the healthcare they’ll need after a life in the military. If they’re ever injured and unfit for service, they’ll be competing to afford the medications they need on Revolico.
My money is on history repeating. I don’t believe those in their thirties and forties amongst Cuba’s military ranks will be able to overlook their own bleak futures. Or avoid seeing the growing disparity and poverty prevalent in Cuban society today.
This generation was raised since birth on the high minded ideals of the Revolution. Some of them will eventually stand up. I’ll bet they’ll eventually seek to make things right.
They are the one, not apart from, but in the many, whose gaze is focused not on a great beyond, rather their gaze is fixed firmly on their world in their time and they exist in the moment as the living embodiment of ‘right’.
Where Can I Get More Information About Cuba?
I’ve made a Cuba Frequently Asked Questions Page (FAQ) available on this website. And I would strongly advise you to read it before travelling to Cuba.
My Cuba FAQ page will save you a lot of time and a significant amount of money on your trip to Cuba. Cuba is not the sort of destination in which you can just arrive unprepared.
Read the Cuba FAQ Page here.